John Spears
Toronto Star
November 29, 2002

Negotiations to buy out Bruce Power’s troubled majority partner British Energy are "quite far advanced," Bruce Power’s chief executive Duncan Hawthorne said in an interview yesterday.

Bruce Power has been in discussions with a group led by Cameco Corp. to buy out British Energy’s 82.4 per cent stake.

"Before Christmas, I think we’ll have made a pretty clear announcement of where we are," Hawthorne said.

Bruce Power got some breathing room yesterday when British Energy got more emergency help from the British government. A previous emergency package was to expire today.

As a condition of sustaining British Energy, however, the British government says the company must complete the sale of its Canadian and U.S. interests.

The new emergency aid will give British Energy until February to restructure.

Hawthorne said the reprieve would provide enough time to reach an agreement with Cameco and its partners, thought to include TransCanada PipeLines Ltd. and Borealis Capital Corp., which is affiliated with the OMERS pension fund. A Cameco spokesperson wouldn’t confirm the involvement of the other companies.

Cameco is currently a 15 per cent partner in Bruce Power. Two employee groups hold the remaining interest.

"Cameco has arrangements within our partnership that give them right of first offer," Hawthorne said. "We are dealing with our partner in trying to stabilize Bruce."

Jamie McIntyre of Cameco said talks on Bruce Power are "progressing positively" but would not predict when a deal might be reached.

British Energy’s financial troubles raised regulatory problems for Bruce Power because the Canadian Nuclear Safety Commission requires nuclear plant operators to provide guarantees that financing is available to cover the costs of an orderly plant shutdown.

When British Energy announced earlier this year that it couldn’t pay its bills, the safety commission raised questions about the worth of British Energy’s guarantees.

But the commission said it was satisfied with the original emergency aid package offered by the British government.

Hawthorne said yesterday that the nuclear safety commission need not be involved in reviewing a deal with the Cameco group, if one is worked out.

"The reality is that Bruce Power is the licensee," he said.

"The capability to operate the site as judged by the (nuclear safety commission) is invested in the operational capability that exists on the Bruce site. In any discussions we’re having, nothing would disrupt the site operational capability.

"There’s no regulatory trigger in any of the discussions we’re having because there is no change to the licensee or the capability of the licensee."

The watchdog group Energy Probe wrote to the safety commission on Nov. 19 expressing concern about control of Bruce Power moving from British Energy, an experienced nuclear plant operator, to a group whose members have no experience operating nuclear plants.

Tom Adams, executive director of Energy Probe, said yesterday that the concern remains.

"The safety regulator needs to apprise itself of the capacity of the controlling interests to discharge their nuclear safety responsibilities," Adams said.

Under British Energy’s latest emergency restructuring plan, the British government will provide a $1.6 billion loan until next March and underwrite the cost of decommissioning nuclear plants.

British Energy must also restructure its $3 billion debt, converting some of it to equity, which will dilute the stake of its existing shareholders.

Chairman Robin Jeffrey has been replaced by Adrian Montague. The company’s shares have dropped from 250 pence a year ago to 6.5 pence yesterday.

The Bruce station is owned by Ontario Power Generation. OPG, owned by the provincial government, issued a statement yesterday saying that it hopes that a "sensible solution" will be reached in Canada.

"We believe our financial interests in our lease are more than adequately protected," the agency said.